Correlation Between Westone Information and Heilongjiang Publishing

Can any of the company-specific risk be diversified away by investing in both Westone Information and Heilongjiang Publishing at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Westone Information and Heilongjiang Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Westone Information Industry and Heilongjiang Publishing Media, you can compare the effects of market volatilities on Westone Information and Heilongjiang Publishing and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Westone Information with a short position of Heilongjiang Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westone Information and Heilongjiang Publishing.

Diversification Opportunities for Westone Information and Heilongjiang Publishing

0.55

Correlation Coefficient

Westone Information  Heilongjiang Publishing

Very weak diversification

The 3 months correlation between Westone and Heilongjiang is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Westone Information Industry and Heilongjiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heilongjiang Publishing and Westone Information is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Westone Information Industry are associated (or correlated) with Heilongjiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heilongjiang Publishing has no effect on the direction of Westone Information i.e., Westone Information and Heilongjiang Publishing go up and down completely randomly.

Pair Corralation between Westone Information and Heilongjiang Publishing

Assuming the 90 days trading horizon Westone Information Industry is expected to generate 0.92 times more return on investment than Heilongjiang Publishing. However, Westone Information Industry is 1.08 times less risky than Heilongjiang Publishing. It trades about 0.06 of its potential returns per unit of risk. Heilongjiang Publishing Media is currently generating about 0.05 per unit of risk. If you would invest  1,536  in Westone Information Industry on September 27, 2024 and sell it today you would earn a total of  152.00  from holding Westone Information Industry or generate 9.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Westone Information Industry  vs.  Heilongjiang Publishing Media

Westone Information

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Westone Information Industry are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Westone Information sustained solid returns over the last few months and may actually be approaching a breakup point.

Heilongjiang Publishing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Heilongjiang Publishing Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heilongjiang Publishing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Westone Information and Heilongjiang Publishing

The main advantage of trading using opposite Westone Information and Heilongjiang Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westone Information position performs unexpectedly, Heilongjiang Publishing can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Heilongjiang Publishing will offset losses from the drop in Heilongjiang Publishing's long position.

The idea behind Westone Information Industry and Heilongjiang Publishing Media pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.